December 16, 2024
By Our Correspondent
Hong Kong is aiming to expedite its licensing procedures for cryptocurrency platforms, as the state Exchange Fund contemplates investments in digital assets.
During a parliamentary session, Joseph Chan, the Acting Secretary for Financial Services and the Treasury, announced that the Securities and Futures Commission (SFC) will implement a “rapid licensing process” for crypto trading platforms.
Furthermore, a consultative panel will be formed to assist licensed platforms, with these initiatives anticipated to be operational by early next year.
“This strategy can cultivate an environment conducive to innovation in a sustainable and responsible manner, while simultaneously ensuring financial security, thereby reinforcing Hong Kong’s pivotal role as an international financial hub,” Chan stated.
In the same discussion, Council member Johnny Ng suggested that cryptocurrency could serve as a high-performing investment avenue.
“It has been reported that financial institutions globally have progressively increased their investments in digital assets, with the price of bitcoins, often referred to as ‘digital gold,’ surging in tandem this year, indicating a shift towards the digitalization of global currencies,” Ng remarked.
He subsequently inquired, “Will the Government consider incorporating digital assets and cryptocurrencies into its fiscal reserves and acquiring them continuously through the Exchange Fund for long-term retention?”
In reply, Chan noted, “While crypto-assets are not the primary focus of the Exchange Fund, the external managers appointed by the HKMA do invest in a variety of asset classes and markets worldwide. It is possible that investments involving crypto-assets may occur during the investment activities of the external managers at various times, although the relevant proportion remains minimal.”
Hong Kong is making notable progress in its ambition to establish itself as a regional cryptocurrency hub. Earlier this year, the government introduced a legislative proposal that provides a comprehensive framework for stablecoin issuers and marketers.
The newly proposed legislation requires stablecoin issuers to obtain licenses, maintain reserves in local banks, possess a minimum capital of HK$25 million, and adhere to stringent compliance protocols.
According to the proposed regulations, both stablecoin issuers and marketers must acquire licenses from the Hong Kong Monetary Authority (HKMA). This requirement encompasses all stablecoins, including those linked to the Hong Kong dollar, with issuers obligated to hold reserve assets in local banking institutions. The HKMA may also permit foreign custody arrangements under certain conditions.
Additionally, the region has recently suggested eliminating cryptocurrency taxes for affluent individuals. In a detailed 20-page proposal, the Hong Kong government indicated that this tax exemption would extend to private equity funds, hedge funds, and investment vehicles utilized by wealthy individuals concerning gains from cryptocurrencies, private credit investments, and other asset classes.
Hong Kong’s initiative to waive crypto taxes for high-net-worth investors aims to attract asset managers and enhance its reputation as a premier destination for crypto finance.
The proposal emphasized that taxation is “one of the key considerations” for asset managers when determining their operational base, highlighting Hong Kong’s commitment to fostering a “conducive environment” for these professionals.
